outheastern Bell stocks a certain switch connector at its central warehouse for

Question

outheastern Bell stocks a certain switch connector at its central warehouse for supplying field service offices. The yearly demand for these connectors is 14,300 units. Southeastern stimates its annual holding cost for this item to be $25 per unit. The cost to place and process an order from the supplier is $77. The company operates 300 days per year, and the ead time to receive an order from the supplier is 3 working days. what is the economic order quantity? units round your rosponse to the nearest whole number b) What are the annual holding costs? S round your response to the nearest whole number c) What are the annual ordering costs? $(round your response to the nearest whole number). d) What is the reorder point?units (round your response to the nearest whole numbor Enter your answer in each of the answer boxes. d Show All xlsx , QM 352 Grade Projec

Explanation / Answer

a. EOQ= ((2*Annual Demand*Cost per order)/Holding cost)1/2

Demand= 14300 units annually

Order cost= 77$

Holding cost= 25 $ per unit

EOQ= (2*14300*77/25)1/2

= 296.79 units = 297 units

b. Annual Holding Cost = (EOQ/2) *Holding cost

= (297/2) *25

= 3712.5

c. Annual Ordering cost = (Annual demand/EOQ) *ordering cost

= (14300/297) *77

= 3707.407

d. Reorder point = Average daily demand*lead time = (14300/300) *3 = 143 units

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